They're Rounding the First Turn! And the Favorite Is . . .

By NICHOLAS D. KRISTOF

New York Times

January 17, 2006

CALCUTTA

The great race of the 21st century is under way between China and India to see which will be the leading power in the world in the year 2100.

President Bush's trip to India next month is important, for we in America must brace ourselves to see not only China looming in our rear-view mirror, but eventually India as well. India was the world's great disappointment of the 20th century, but now it's moving jerkily forward with economic reforms, reminding me of China around 1990.

One of India's (and China's) greatest strengths is its hunger for education. Most American newspapers lure readers with comics, and some British tabloids with photos of topless women, but a Calcutta daily newspaper is so shameless that it publishes a column on math equations. Imagine titillating readers with trigonometry!

I visited the ramshackle Hasi Khusi Kindergarten and Primary School in a poor area of Calcutta, where most of the pupils' parents are illiterate street vendors, rickshaw drivers or laborers. Out of an average family income of $23 a month, the parents pay a one-time fee of $13 for registration and then $2.30 a month.

"What they didn't get, their children must get," explained the principal, Sampa Sarkar. Even kindergartners study English, Bengali, math, art and music - and do 30 minutes of homework. Private schools like this one are booming all across the country.

With India's ever-deepening pool of English speakers, its outsourcing boom will continue. Your next employment contract may be prepared by an Indian law firm, your mutual fund advised by Indian analysts - and if you need elective surgery, you may get it at a luxurious Indian hospital that will let foreigners combine their medical care with a recuperative vacation in Agra or Goa.

India has a solid financial system, while China's banking system is a catastrophe. And India is in better shape demographically for long-term growth: China has already reaped most of the economic benefits of population control and is now rapidly aging, but India's population will be disproportionately working-age for many decades to come (a factor that strongly correlates with economic growth).

India's democracy, free press and civil society also provide a measure of political stability. Sure, India can erupt, as it did with the slaughter of Muslims in Gujarat in 2002. But the risks of social and political explosions in India are declining, while in China they may be rising.

China will probably manage its eventual transition to democracy with bearable turbulence, as Taiwan and South Korea did, but with China anything is conceivable, including a coup d'état, mass unrest or even civil war.

Yet if democracy is one of India's strengths, it's also a weakness. Prime Minister Manmohan Singh knows exactly what to do to, and I've rarely met a leader more competent (or less charismatic). But his reforms are stalled or slowed in the Indian political labyrinth. India's basic problem is that its economic policy-making isn't nearly as shrewd, pro-growth or farsighted as China's.

That's a tragedy: we should all want India to demonstrate that democracy is an advantage. But Indian lawmakers aren't helping.

Foreigners are still blocked from directly investing in some sectors in India, like retailing. Privatization is lethargic. Food subsidies are soaring and are so inefficient that it costs 6.6 rupees to transfer 1 rupee's worth of food to the poor. Restrictive labor laws mean that companies hesitate to hire, and regulations tend to suffocate entrepreneurship.

The upshot is that India has enjoyed a boom that has added few jobs. Only about one million people work in technology, and manufacturing, which could absorb tens of millions of poor rural laborers, trails even Bangladesh. The losers are India's poor.

And while China has been exceptionally shrewd in upgrading its infrastructure, India has been pathetic. India's economic future is marred by its third-rate roads and ports.

India is also horrendously mismanaging its AIDS crisis; it may already have more H.I.V. cases than any country in the world. AIDS casts a cloud over this nation's entire future.

The bottom line is that the once-great nation of India is reawakening from several centuries of torpor, and facing less risk of a political cataclysm than China. India is poised to again be a great world power.

But over all, my bet is that China will still grow faster and win the race of the century. I'm going to tell my kids to keep studying Chinese, rather than switch to Hindi.